The Nation Newspaper

Category: Energy

  • Sahara Group advocates regional collaboration on power

    Africa should explore  policies and investment opportunities in the power sector to boost sustainable supply, affordability and off-grid rural power solutions, the Executive Director of Sahara Group, Tonye Cole, has said.

    He spoke at the World Economic Forum on Africa in Durban, South Africa. He said the involvement of the private sector in the continent’s power space had laid the foundation for significant improvement, which must now be enhanced by collaboration and support from governments.

    “We still have a lot of work to do in terms of harmonising regulations across borders, so that the regulations we have in Nigeria for example must be the same or close to that which will be in Benin, Togo and Ghana so that the West African Power Pool, for example, can work. When you add this to a regulatory approach where the government actually provides support for investors and operators through market reflective policies, we will be looking at fast paced growth in the power sector,” he said.

    Cole noted that effective collaboration would unite regulators and operators in the generation, transmission and distribution value chains of the sector to harmonise issues around Power Purchase Agreements (PPAs), securitisations and tariff.

    “We must work towards creating a power sector that encourages cross-border collaboration to boost offshore investments, efficient pricing and policy reviews that will diversify prospects for off-grid power projects and rural electrification,” he added.

    He urged governments on the continent to provide incentives in for investors in the rural areas to accelerate inclusive growth and economic prosperity across Africa.

    “Power is critical to the ongoing economic development in Africa and for us at Sahara Group, we are continually reaching out to other stakeholders to ensure the quest of bringing energy to homes and businesses in Africa is sustained and ultimately, achieved.”

  • Global oil supply dips by 41000 bpd in April

    Global oil supply fell by 41,000 barrels per day (bpd) in April, the Organisation of Petroleum Exporting Countries (OPEC) said in this month’s oil market report.

    The organisation said world oil supply fell by 0.41 million barrels per day (mbpd) in April to average 95.81 mbpd. However, global oil production was 831,000 barrels daily higher than a year ago and increased by 363,000 barrels per day in the first quarter of the year, it added.

    The report said: “Non-OPEC oil supply in 2016 was revised down by 18,000 barrels per day due to a downward revision of Russian oil supply in fourth quarter of 2016 to average 57.30 million barrels per day – indicating a year-on-year decline of 0.71 million barrels per day.

    “In contrast, oil supply in 2017 was revised up by 0.36 million barrels per day to average 58.25 million barrels per day – representing year-on-year growth of 0.95 million barrels per day, following changes in all quarters, mostly in the US, based on US actual production data from February and new forecasts for crude oil output.

    “In 2017, US growth forecast was revised up again, rising by 0.28 million barrels per day to average 0.82 million barrels per day. Similarly, but to a lesser extent, Canada, Brazil and Kazakhstan were revised up, while the growth forecasts for Mexico, China, Azerbaijan, Indonesia, Oman and Colombia were in decline.’’

    It continued: “OPEC natural gas liquids (NGLs) and non-conventional oil production in 2016 was revised down by 34,000 barrels per day to average 6.05 million barrels per day, and indicates a growth of 0.11 million barrels per day year-on-year, while for 2017, the growth forecast was revised up by 40,000 barrels per day to 0.17 million barrels per day to average 6.22 million barrel per day.

    “In April, OPEC production decreased by 18,000 bpd, according to secondary sources, to average 31.73 mbpd. Non-OPEC oil supply in 2016 is estimated to have averaged 57.30 mbpd, representing a decline of 0.71 mbpd over the previous year, and a downward revision of 0.02 mbpd from the last assessment.

    ‘’Within the quarters, non-OPEC oil supply encountered historical downward revisions in fourth of 2016 by 72,000 bpd, only in Russia. Non-OPEC supply in 2016 saw strong declines in  Organisation for Economic Co-operation and Development (OECD) Americas (0.47 mbpd), China (0.31 mbpd), and developing countries (0.10 mbpd.’’

    It added that preliminary March and last month’s data based on weekly figures shew a return to an upward trend with industrial, road transportation fuels, notably distillates and motor gasoline, accounting for the bulk of these increases.

  • Kachikwu: govt is settling JV cash call debts

    Kachikwu: govt is settling JV cash call debts

    •Minister gives score card in US

    The Minister of State, Petroleum Resources, Dr Emmanuel Ibe Kachikwu, has given himself a pass mark.

    Speaking during an interactive session with reporters on the sidelines of the offshore technology conference in Houston, Texas, United States, he listed the opening up of the downstream sector, private investment and diversification of products sourcing through the introduction of Price Modulation Mechanism (PMM)  as some of his achievements.

    Others are the appropriate pricing framework (APF) he inaugurated.

    The policies, he noted, have reignited the commercial vibrancy of the downstream sector with a  landmark move from  a subsidy based sector to a liberalised sector. They also resulted in the elimination fuel scarcity and long queues at filling stations, products adulteration and diversion, and profiteering that characterised the sector and plagued the nation in the past.

    Kachikwu said his ministry had embarked on making the nation being a net exporter of the petroleum products.

    “In line with these reforms, the Ministry and Nigerian National Petroleum Corporation (NNPC) are driving the private sector-led refineries rehabilitation and expansion programme. This is aimed at repositioning the country for petroleum products self-sufficiency, which will minimise the pressure on demand for foreign exchange for the importation of products,’ he said.

    He added: “Another key milestone recorded recently was the commencement of settlement of outstanding joint venture cash call debts the Federal Government owes the International Oil Companies (IOCs).’’

    According to him, the first payment of $400 million was made last week to the IOCs. This was part of cash call debt owed the IOCs last year.

    This is different from the discounted $5.1 billion cash call arrears it negotiated last December  with the IOCs.

    “The Federal Executive Council has approved the Ministry’s proposal and the concurrence of the National Economic Council has been obtained to begin payments and the Ministry on behalf of NNPC has engaged the IOCs and secured a discount of 25 per cent with each JV Partner on the pre-2016 Cash Call Arrears resulting in a final settlement in the sum of US$5.1 billion payable from incremental production from the JV assets over a five-year tenor without any interest charges during the repayment period.

    ‘’In addition, the 25 per cent discount will not qualify for tax deduction. The sustainable funding of the JVs will lead to an increase in national production from the current 2.2 million barrels per day (mbpd) to 2.5mbpd by 2019, while the immediate effect of the new cash call policy will increase net Federal Government Revenue per annum by about $2 billion.

    “The IOCs have announced new investments in the upstream sector that will create limitless opportunities, including job creation along the value chain. There is extensive collaborative work being done by the Ministry of Petroleum Resources with the National Assembly on the Petroleum Industry Governance Bill (PIGB). This bill would be followed by the Bill on Fiscal Terms. The Ministry and agencies have been collaborating with the National Assembly on the PIGB to ensure its passage in record time.”

    The Minister restated the efforts of the Federal Government to continue to build a strong collaboration between Nigeria and the World Bank on the Global Gas Flaring Reduction Energy and Extractive Global Practices (GGFR). The National targets for gas flare out for Nigeria remains fixed at 2020 while the target for the global initiative is 2030.

    The Ministry has unveiled the National Gas Flare Commercialisation Programme, which is a key component of the draft Gas Policy awaiting the approval of the Federal Executive Council and when fully implemented, he said, adding that it would unleash a gas revolution that would lead to improved power generation, full scale industrialisation and LPG penetration at the domestic levels.

    The minister said work was ongoing on tracking of oil molecules from production to destination and reduction of contracting cycle in the  oil and gas sector to ensure delivery of projects in the projected period.

    He attributed the successes to the continuous implementation of the Nigerian Petroleum Roadmap – “7 Big Wins”, which are the short and medium term priorities to grow the oil and gas sector of which BigWin5 is pursuing peace, security and stability in the Niger Delta.

  • National mining exhibition coming

    The National Mining Summit titled: ConMin West Africa has been planned to hold on June 13 at the International Conference Centre, Abuja.

    In a statement, the Manager in charge of the exhibition Jamie Pearson stated that the exhibition is aimed at assisting the sector’s development, through ensuring that all key stakeholders from across the supply chain were present. ‘’It will enable for businesses to connect with policy makers and financiers. Furthermore, with the sector in its infancy – the organisers have allowed for an important mix of international players from countries where mining is far more advanced to offer case studies and advice,’’ he said.

    He listed experts being expected at the events to include Minister Mosebenzi Joseph Zwane, minister from South Africa; Minister Dan Kazungu from Kenya; Monsieur Hassane Baraze Moussa, Ministre Des Mines, Niger and Paul Lehman, the High Commissioner of Australia to Nigeria.

    The events would also feature eminent personalities, such as Dr. Toni Aubynn, the Chief Executive Officer (CEO)  of the Ghana Minerals Commission; Ms Yewande Sadiku, Executive Secretary, Nigerian Investment Promotion Council and Mr. Oscar Onyeama, the CEO of Nigeria’s Stock Exchange (NSE).  These experts, he said, would speak be on topics, such as Transparency and Sustainability, to Geological Data Generation and Mineral Prospectivity.

    The exhibition is expected to be attended by companies exhibiting from across the construction and solid minerals industries. The conference running alongside the exhibition will be focused on construction with technical sessions held by exhibitors and leading brands and more general sessions including insurance of construction programmes and financing projects.

    Visitors will be able to hear from leading industry experts on these pertinent topics, while also discovering new technologies, greeting potential partners and generating business for their firms.

    The summit, which will be held under the auspices of the Ministry of Solid Minerals, in partnership with Deloitte Consulting is endorsed by the NSE; FOCI; VDMA. It is being sponsored by Total and Soetec Engineering Limited, among others.

  • Lagos seeks Fed Govt’s approval to use Aje field’s

    The Lagos State government is in discussion with the Federal Government through the Department of Petroleum Resources (DPR) – Nigeria’s oil and gas industry regulator, to get approval to take all the gas produced from Aje field located offshore Lagos.

    A source in the Ministry of Petroleum Resources who requested for anonymity told The Nation that the discussion is progressing well but couldn’t confirm whether the state would be able to get the government’s endorsement for its request.

    According to the source, Lagos wants to take all the gas produced from Aje field to generate power for residential, commercial and industrial electricity consumers. However, he didn’t give further details on the transaction

    Lagos State Governor, Mr. Akinwunmi Ambode had announced that the state targets 3000 megawatts (Mw) generation capacity to be able to sufficiently meet the power consumption requirements of the state. He said the quest to achieve energy security for the nation can no longer be left to the Federal Government to address alone, adding that his government aspires to give the state 24 hours power supply by 2022.

    He said the reason Lagos embarked on the initiative was that it believes strongly that if the power problem is solved in Lagos, it is technically solved in the whole of the country.

    “The problem of power in Nigeria is the problem of transmission and that is the truth. We have generating companies and we have distributing companies and they say power is in the hands of the private sector but we know technically that that is not totally true. We also know that transmission is hundred per cent owned by government,” he said.

    Besides,  out of the 3000Mw envisaged by 2022, the governor said 350Mw would be delivered by the first quarter of next year, additional 850Mw by the last quarter of 2018, and the balance of 1,800Mw not later than third quarter of 2022. So the state needs a lot of gas to be able to achieve production of such power production, he said.

    Also, the state Commissioner for Energy and Mineral Resources, Olawale Oluwo told The Nation on the sidelines of the inauguration of the National Executive Council members of the Oil and Gas Trainers’ Association of Nigeria (OGTAN) in Lagos, where he represented the governor, that the state government just established an integrated oil and gas firm that will play across the entire oil and gas value chain, which may involve a petrochemical plant that consumes a lot of gas.

    He said Ibile Oil & Gas Corporation, the business arm of the Lagos State oil and gas operations, has concluded the setting up of its structures and has gone into marketing of the new oil firm for operation and partnerships. The oil firm will play in all the oil and gas value chain. They are into the downstream, midstream and upstream. They have been mandated to freely invest anywhere in the world and intervene in any area of business. They have put their structures and strategies in place.

    “Currently they are moving into business development, they are marketing. They are doing a front end work and sometime later this year they will go into major projects,” he said.

  • Nigeria’s output to hit 2.1m bpd on Bonga

    Nigeria’s output to hit 2.1m bpd on Bonga

    Nigeria’s oil production is ramping up and will shortly reach its previous volume of 2.1 million barrels per day (bpd) before Shell’s deepwater facility, Bonga, was shut down for over a month for routine turn around maintenance (TAM), it was learnt.

    Shell’s Corporate Media Relations Manager Precious Okolobo confirmed that Bonga TAM has been completed and the facility has resumed operation.

    He said: “Shell Nigeria Exploration and Production Company Limited (SNEPCo) has completed the turnaround maintenance at Bonga, and resumed production at the offshore field. The activity commenced on March 4, 2017 and was completed on schedule, with the first well opened up on  April 8, 2017. Production is ramping up.

    “This is another milestone for the Bonga team,” said Bayo Ojulari, SNEPCo Managing Director. Having won the ‘Asset of the Year’ Award 2016 in the Shell Group, the Bonga team ably took up the challenge of achieving the three major components of the turnaround maintenance: statutory and regulatory safety checks, inspections, repairs and replacement of equipment and upgrades.”

    However, it was learnt that facility production is not at full capacity as it was before the TAM shut down. The output is being increased gradually as is the case after major turnaround maintenance.

    Also oil traders, according to Reuters, confirmed the development. The traders said they were still waiting for loading programmes from Bonga. “Nigerian cargoes for May loading are clearing and the market has found support on improved buying interest amid strong refinery margins, the traders said.

    “Nigeria’s Bonga oilfield resumed production after planned maintenance, but traders were still waiting for loading programmes. The bulk of the June loading schedule has been issued to the market, although programmes are yet to appear including Bonga, Erha and Yoho, the traders added.

    The 225,000 bpd Bonga field, operated by Shell Nigeria Exploration and Production Company Limited (SNEPCo), began producing in November 2005.

    “This is the fourth turnaround maintenance since Bonga began production,” said Bayo Ojulari, Managing Director SNEPCo when the shutdown of the facility was announced last month. “The exercise will help ensure sustained production and reduced unscheduled production deferments. For the Bonga team, this is another opportunity to excel, having won the ‘Asset of the Year’ Award 2016 in the Shell Group, followed by runners-up in Norway and Malaysia. We are pleased that the award recognised the continuing collaboration towards optimum production with a focus on safety, cost and Nigerian content development which will be invaluable in the maintenance work.”

    The turnaround maintenance involves inspections, recertification, testing and repair of equipment as well as engineering upgrades with Nigerian companies and subsea professional playing key roles. A major focus is the Bonga floating, production, storage and offloading (FPSO) vessel, which is at the heart of Bonga operations. The Bonga FPSO has the capacity to produce 225,000 barrels of oil and 150 million standard cubic feet of gas per day, he stated.

  • ‘Illegal miners ‘ll not benefit from $150m fund’

    The Federal Government has said illegal mining firms  will not benefit from the $150 million grant given by the World Bank to support the Ministry of Mines and Steel Development.

    This follows the government’s decision to allow operators with reasonable level of commitment to operate in the industry, develop strategic mining areas for growth and further make the sector one of the major contributors to the Gross Domestic Product (GDP).

    Yinka Oyebode,  an aide to the Minister of Mines and Steel Development, Dr Kayode Fayemi, told The Nation  on phone that the fund would be used to finance exploration and production of solid minerals. He added that the government was looking at two significant areas for the disbursement of the loans.

    The government, he noted, wants operators with tangible evidence of operation as well as those working in principal mining areas to benefit from the facility.

    He described operators with tangible evidence as those with  proven track records of performance while principal mining areas operators mine strategic minerals.

    According to him, the decision by the government to provide funds for the mining of strategic minerals is in line with the Roadmap for Sustainable Growth in the Mining Sector, adding that the idea would help crystallise the government’s ambition of making the sector one of the major contributors to the GDP.

    He said industrial minerals, metallic minerals, construction minerals and precious stones were among those in strategic areas, which the Federal Government planned to fund.

    He stated that industrial minerals include limestone, barite, kaolin, gypsum feldspar, while metallic minerals are gold, iron, ore, lead, zinc, cassiterite and columbite; granite, marble, dimension stone, gravel, laterite, and sand are construction minerals and precious stones include sapphire, tourmaline, emerald, topaz, amethyst, and garnet.

    Oyebode said: “Two major areas are of great importance to the ministry and the Federal Government as regard the disbursement of the $150million World Bank gave to the sector.

    “First is allowing operators with tangible evidence of operation and those operators who operate in strategic minerals areas to benefit from the loans.  This implies that operators who fail to show enough evidence of participating in the industry would not get the loans.”

    Oyebode stated that while some operators are working in the sector, others are not. He said many people applied for the loans, adding that the government needed to vet the list of the applicants in order to ensure that the money is judiciously spent.

    He said after the vetting, the government will determine those that are eligible for the loans.

    He said the application for the loans, follows an advertorial published in the national dailies for that purpose by the government asking for qualified operators to apply for the loans in order to be able to fund their projects and further encourage the growth of the sector.

    A lot of applications have been received and screened for that purpose. Qualified applicants would emerge and get the loans soon for the growth of the industry, he added.

    He said prior to this period, members of the Federal Executive Council (FEC) have met and approved the loans, adding that the approval meant that the loans are ready for disbursement.

  • LADOL mulls 50mw gas -fired plant

    LADOL mulls 50mw gas -fired plant

    The Lagos Deep Offshore Logistics (LADOL plans  to generate 50 megawatts (mw) of electricity to boost power supply in the country, its Managing Director, Miss Amy Jadesinmi, has said.

    Speaking during a tour by officials of the Nigeria Export Processing Zones Authority (NEPZA) to the base in Lagos, she said the plant would not only boost available generation, which is grossly inadequate to meet local needs,  but would also be an added boost to capacity development in-country.

    She said the building of the plant would be in phases, adding that when the plant is completed, power supply would increase averagely in areas where the plant is sited.

    Jadesimi said: “We are building a 50Mw power plant in phases. The first phase is 24Mw, which will be ready in about 18 months from now.”

    On the gas feedstock to fire the gas plant, she said LADOL was in agreement with two gas firms to guarantee the steady supply of liquefied natural gas (LNG) to generate the output.

  • JV cash call debt stagnates oil reserves’ growth, says NAPE

    JV cash call debt stagnates oil reserves’ growth, says NAPE

    The Nigerian Association of Petroleum Explorationists (NAPE) has blamed the shortfall in Joint Venture (JV) funding for the stagnation of Nigeria’s oil reserves at 37 billion barrels for over 10 years.

    Its President and the Chief Executive Officer, Degeconek Nigeria Limited, an oil and gas consultancy firm, Mr. Abiodun Adesanya, spoke to reporters on the sidelines of the 10th Annual sub-Saharan Africa Oil and Gas Conference in Houston, Texas, United States (U.S.).

    He lamented that the shortfall in JV counterpart funding from the Federal Government, put at $7 billion as at last year, had grave impact on exploration, adding that as a result of lack of exploration, there was no additional reserves increase.

    He regretted that the budget earmarked for exploration activities as a result of the shortfall in JV funding had dwindled over the years leading to low discoveries and drilling of new wells.

    He said: “If you don’t spend money, you don’t get anything back. It is risky, which is why when the issues of budget cut comes up, the most hit is exploration because of the associated risks. But since the present administration came up with a formula to work on JV funding, we are beginning to see interest in exploration. Don’t forget that apart from the problem of funding, the issue of security in the Niger Delta in the last 15 years has been a major challenge.”

    The NAPE chief noted that reserves had not been static but rather a plus and minus issue.

    “As you produce, you deplete reserves. As you promote certain contingents into reserves, you increase the reserves. So, what has happened is that it is better to be flat than go down. I guess the strategy is to keep it flat if we cannot make it to go up; that is why you are seeing 37 billion barrels when production is ongoing. Depletion is going on and replenishment is going on simultaneously as well. And when you have that kind of scenario, the figure could go up or down,’’ he explained.

    He assured that the 40 billion barrels of reserves targeted by the Federal Government by 2020 was achievable because the country has been able to identify where the resources to achieve the target are. He added that there were quite a number of fields that have been discovered but not yet certified by the Department of Petroleum Resources (DPR) into being called reserves.

    He said a formula had been found to address that challenge and it seemed to be working because the country had witnessed a reduction in the vandalism of oil production infrastructure, and that again had increased the confidence of the operators to step out.

    He advised the Federal Government to make provisions for incentives for prospective investors willing to explore hydrocarbon in frontier basins to further boost the reserves. According to him,  such incentives have become necessary in view of the government’s intention to increase oil reserves to 40 billion barrels by 2020.

    Adesanya said a frontier basin is one where exploration activities have not been carried out or a basin with short-term exploration activities and a significant volume categorised as undiscovered. Such basins are Chad, Anambra, Bida, Dahomey, Gongola/Yola and the Sokoto, as well as the Middle/Lower Benue Trough.

    According to him, the government should provide incentives such as pioneer status to investors willing to explore in the cretaceous frontier basins because they are high-risk areas unlike the prolific tertiary basins such as the Niger Delta.

  • Domestic gas supply increases to 40%, says DPR

    Domestic gas supply increases to 40%, says DPR

    •Agency fines defaulters  

    Domestic Gas Supply Obligation (DSO), an initiative of the Federal Government to meet national demand, is achieving the desired result with the level of compliance by oil producing firms rising to 40 per cent this year, The Nation has learnt.

    Before now, the level of compliance by oil firms was very low. According to the Department of Petroleum Resources (DPR), between 2008-2013, DSO compliance was about 23 per cent, by 2016 it rose to 38.18 per cent and currently stands at 40 per cent.

    DPR’s Deputy Director/Head, Upstream, Mrs. Pat Maseli, stated this at the 10th annual sub-Saharan Africa Oil and Gas conference holding in Houston, Texas.

    She said DSO was assigned annually to all gas producers, such as Shell Petroleum Development Company (SPDC), Agip, Total, Chevron, Mobil Producing Nigeria Unlimited (MPNU), Addax, Nigerian Petroleum Development Company (NPDC), and Pan Ocean Oil Company Limited (POOCL) pursuant to the National Domestic Gas Supply Obligation & Pricing Regulations 2008 to determine the gas demand or the national gas requirement annually and evaluate utilisation along the gas value chain, among others.

    Maseli noted that the Federal Government intervenes in several ways to ensure that national gas requirements are adequately met. Some of the interventions include the estabegy to facilitate orderly gas sector development, ensures integrated approach to maximise potential benefits and ensure sustained implementation, which is critical for actualisation

    Others are through legislative reforms, Domestic Gas Supply Obligation Regulation (DGSO) 2008, establishment of National Gas Policy (NGP) and Production Sharing Contract (PSC) gas terms, provision of guidelines for third party access to gas-at-flare-points, commercial framework reforms, transitional gas pricing to power and other sectors, world class contractual frameworks for supply, transmission and network access, World Bank revenue securitisation, gas aggregator to manage DGSO and price aggregation, infrastructure blueprint, provision of network of critical pipelines and three Central Processing Facilities (CPF), Network Code Implementation, Petroleum Industry Gas Bill (PIGB) and sanctions, which include imposition of penalties such  as $3.5 per 1000 standard cubic feet (scf) shortfall, among others.

    Apart from boosting domestic gas supply to meet national demand, Federal Government’s interventions were to ensure that as much as possible is utilised to reduce flaring.

    According to a report on global gas flaring in 2015 by the World Bank led Global Gas Flaring Reduction (GGFR), Nigeria ranks seventh in the world having flared about 8billion cubic meters of gas in 2015.

    The GGFR report stated that within the period under review, Russia topped the global flaring with 20billion cubic meters of flared gas followed by Iraq with 16bilion cubic meters, Iran 12billion, United States 11billion, Venezuela and Algeria nine billion cubic meters each.